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| Red, black and rising. |
The Moody's downgrades do not bring much price innovations to the table, as markets had already discounted the news. Biggest "surprise" was UK's negative outlook, as the country has tried to distance itself from the Eurozone's troubles. Even a sovereign currency does not guarantee growth & solvency.
The EU's economic imbalance report published later today will probably not contain any surprises, and I believe the main function is to show to markets how much the authorities understand and realize. After writing the above, I immediately had doubts and fear the report might be a negative surprise. What if it continues to insist this is a debt problem - instead of being a currency crisis, followed by a balance-of-payments-crisis, private debt crisis and public debt crisis.
If you read only one thing today, I suggest the Moody's press release. The S&P's press release on their earlier downgrades was an important document with inconvenient truths. While there are not that many novel ideas in Moody's release, it is important to read between the lines.
News roundup – Between The Hedges
News – The Trader
Daily – Danske Bank (pdf)
-Moody’s downgrades, BoJ announces new easing
Morning Briefing – BNY Mellon
-Antonis Samaras wants to preside over an economy in dire straits
Market Preview – Saxo
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
EURO CRISIS: GENERAL
Who’s the most imbalanced of all (EU members)? – alphaville / FT
projected scorecard from RBC Capital Markets representing the expected findings of the first EU report on economic imbalances, which will be released later on Tuesday.
projected scorecard from RBC Capital Markets representing the expected findings of the first EU report on economic imbalances, which will be released later on Tuesday.
Two Charts On The European Growth Dilemma – ZH
Over-levered and exchange-rate anchored peripheral nations have experienced international wealth creation that is implicitly unreal and unsustainable...The dilemma is whether the peripheral nations see large and negative GDP growth to revert down or if Germany is willing to accept far higher growth and inflation (maybe 7% nominal) to adjust upwards to the seemingly unsustainable levels of the peripherals. Austerity versus Growth/Inflation.
What is LTRO? – Macro and Cheese
A nice intro to someone who recently fell to earth.
EURO CRISIS: GREECE
Why is the March 20th date still in play? Why talk about needing the bailout by then for bond payments when there should be no payments due. In theory PSI will have been successful and pushed off all private holding into the distant future.
Does anyone seriously believe this penned agreement is worth the paper it's printed on. Actually, what makes anyone think there is an agreement in the first place?
EURO CRISIS: MOODY’S DOWNGRADES
Moody’s Monday Mass Downgrade – Credit Writedowns
The biggest surprise to us was that Moody’s cut the UK outlook from stable to negative…We stress again that the loss of AAA is not the end of the world, and one could make the case that AA is indeed the new AAA.
Moody's adjusts ratings of 9 European sovereigns to capture downside risks – Moody’s
Press release, with reasonings separately for each country.
Euro Area Sovereign Crisis & Affected Credits – Moody’s
BANK OF JAPAN EASES
From the BoJ with love – alphaville / FT
That being how the BoJ tells the markets… “I love you”: sending an extra 10tn yen straight into the JGB market.
That being how the BoJ tells the markets… “I love you”: sending an extra 10tn yen straight into the JGB market.
Japan Announces $130 Billion QE Program, One Percent Inflation Target; 4th Quarter GDP Unexpectedly Contracts 2.3%; Lawmakers Threaten to Take Over Monetary Policy – Mish’s
In case you missed the key sentence, here it is:"BOJ Governor Masaaki Shirakawa was grilled in parliament last week by lawmakers threatening to revise the BOJ law to give the government more scope to intervene in monetary policy" The one thing worse than having central banks be responsible for monetary policy would be to turn it over to politicians.
OTHER
SocGen: QE3 Is Coming Soon, But First The S&P Is Going To Tank – BI
Positive economic surprises are at the high end of the range, and stock prices are usually high at those times. Surprise-index is mean-reverting, could overshoot and lead to stock sell-off. Some really nice charts.
DIVERSION
What Google is Making Space for at the Googleplex – technology review
The search and ad giant is building new labs and its own corporate theme park.
How The Pentagon’s Top Killers Became (Unaccountable) Spies – Wired
How casinos distract – Oscillatory Thoughts